Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q3 2021 Earnings Presentation
62 slides from Toronto-dominion Bank's earnings presentation, 2021
Slide 1: TD Bank Group Investor Presentation Q3 2021
\\ ™, i \ 4. A UA \ A i htt a, 4 WN bi Aye? ALLAN TD Bank Group Investor Presentation Q3 2021
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the United States (U.S.) Securities and Exchange Commission (SEC), and
Slide 3: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q3 2021 Financial Results 2 For the three months ended July 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Balan
Slide 4: TD Framework
TD Framework Execute Own Innovate Think Customer Develop Our Vision Our Purpose Be the better bank To enrich the lives of our customers, communities TD Framework and colleagues Our Shared Commitments Think like a Act like an owner; Execute with Innovate with Develop our customer; lead with integrity
Slide 5: Our Strategy
Our Strategy We're in this together – Anchored by our proven business model and propelled by our forward-focused strategy, we are supporting our customers, communities and colleagues through these challenging times Proven Business Model Forward Focused Purpose-Driven Deliver consistent earnings grow
Slide 6: Proven Business Model: TD Snapshot
Proven Business Model: TD Snapshot Diversification and scale, underpinned by a strong risk culture Our Businesses Canadian Retail ▪ Personal banking, credit cards and auto finance ▪ Small business and commercial banking ▪ Direct investing, advice-based wealth businesses, and asset management ▪ Prope
Slide 7: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics ▪ 10th largest economy ▪ World’s largest economy ▪ Real GDP of C$2.1 trillion ▪ Real GDP of US$19 trillion ▪ Population of ~38 million ▪ Population of ~333 million Canadian Banking System U.S. Banking System ▪ One of the soundest
Slide 8: Top 10 North American Bank
Top 10 North American Bank Canadian North American Q3 2021 (C$ except otherwise noted) TD Bank Group Ranking4 Ranking5 Total assets $1,703B 1st 5th Total deposits $1,119B 1st 5th Market capitalization $151.0B 2nd 6th Reported net income (trailing four quarters) $15.7B 1st 5th Adjusted net income1 (t
Slide 9: Diversified Business Mix
Diversified Business Mix Q3 2021 Reported Earnings Mix1 Three key business lines ▪ Canadian Retail – Robust retail banking platform in Canada with proven performance Canadian Retail, 57% U.S. Retail 2 ▪ U.S. Retail – Top 10 bank4 in Bank, 29% the U.S. ▪ Wholesale Banking – North American dealer focu
Slide 10: Growing Platform / North American Scale
Growing Platform / North American Scale 2000-2004 – A Canadian Leader 2005-2010 – Building U.S. Platform 2011-2015 – Acquiring Assets New Capabilities and Partnerships • Acquisition of Canada Trust (2000) • TD Waterhouse USA / Ameritrade • Acquired Chrysler Financial auto • Acquired Epoch (2013) • T
Slide 11: Forward Focused: Q3 Highlights
Forward Focused: Q3 Highlights Shaping the future of banking U.S. Retail Bank Ranked Canadian Retail Delivering Customer TD Double Up Card #1 in Security and Recognized for Value Through Strategic Off to a Strong Start Reputation in Insider Digital Leadership Card Relationships in the U.S. Market In
Slide 12: Connected Experiences
Connected Experiences Consistent Strategy Q3 2021 Highlights How we compete: ▪ Enabling seamless interactions 6.3M between customers and the 15.2M 4.1M Active Active Digital Active U.S. entire organization Canadian Mobile Users Users1 Mobile Users ▪ Leveraging our industry-leading Experience Design
Slide 13: Digital Adoption
Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)2 (millions)3 (as % of all financial transactions)4 +230 +380 bpsbps YoY YoY +8.0% YoY +12.5% YoY -80 bps +860 bpsYoY YoY 62.3 6.3 92.8 61.3 6.2 Canadian 92.0 Retail1 59.0 5.8 91.9 Q3/20 Q2/21 Q3/21 Q
Slide 14: Purpose Driven: Q3 Highlights
14 Purpose Driven: Q3 Highlights Centered on our vision, purpose and shared commitments US$100MM Equity Fund TD and Canada Post TD Launches For Minority-Owned Enter Strategic Alliance to TD Essential Banking to Small Businesses Improve Access to Financial Expand Offerings for Services for Canadians
Slide 15: TD's ESG Strategy
iS TD's ESG Strategy TD READY COMMITMENT Working together towards an inclusive and sustainable future | Business _| Human Capital Philanthropy | By creating the conditions for economic inclusion and environmental health | Environment Bolster environmental health through sustainable financial product
Slide 16: ESG Performance
16 ESG Performance Environment Social Governance – Global Climate Action Plan, launched in 2020: – Committed to 50% increase in minority – Created Senior Executive Team (SET) Forum to – Target of net-zero greenhouse gas (GHG) executive representation across TD by 2025, provide regular oversight on E
Slide 17: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q3 2021 Financial Results 2 For the three months ended July 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Balan
Slide 18: Q3 2021 Highlights
Q3 2021 Highlights Total Bank Reported Results (YoY) Financial Highlights ($MM) Reported Q3/21 QoQ YoY EPS of $1.92, up 59% Revenue 10,712 5% 0% ▪ Adjusted1 EPS of $1.96, up 57% PCL (37) +$340 ($2,225) Revenue flat Expenses 5,616 (2%) 6% ▪ Strong volume and fee income growth, offset by lower Net Inc
Slide 19: Canadian Retail
Canadian Retail Highlights (YoY) P&L ($MM) Reported Q3/21 QoQ YoY Net income up $862MM (up $837MM adj1.) Revenue 6,579 9% 9% PCL 100 +$137 ($851) Revenue up 9% PCL Ratio 0.08% +11 bps (78 bps) ▪ Higher fee-based revenue and strong volume growth, Insurance Claims 836 90% 4% offset by lower deposit ma
Slide 20: U.S. Retail
U.S. Retail Highlights US$MM (YoY) P&L (US$MM) (except where noted) Reported Q3/21 QoQ YoY Net income of $1,052MM, up $562MM Revenue 2,180 5% 5% PCL (74) +$99 ($729) Revenue up 5% Expenses 1,233 (3%) 2% ▪ Loan volumes down 5% on continued paydowns U.S. Retail Bank Net Income 891 4% +$631 and lower c
Slide 21: Wholesale Banking
Wholesale Banking Highlights (YoY) P&L ($MM) Reported Q3/21 QoQ YoY Net income down 25% Revenue 1,083 (6%) (22%) PCL 2 +$65 ($121) Revenue down 22% Expenses 635 (10%) (5%) ▪ Trading-related revenue of $467MM, down 50% Net Income 330 (14%) (25%) ROE 15.7% (430 bps) (400 bps) PCL higher by $65MM QoQ ▪
Slide 22: Strong Capital and Liquidity Positions
Strong Capital and Liquidity Positions Common Equity Tier 1 ratio of 14.5% Common Equity Tier 1 Ratio Q2 2021 CET 1 Ratio 14.2% Internal capital generation 45 Risk-Weighted Assets up 2% QoQ Acquisitions (15) Increase in RWA (net of FX)1 and other (5) Leverage Ratio of 4.8% Q3 2021 CET 1 Ratio 14.5%
Slide 23: High Quality Loan Portfolio
High Quality Loan Portfolio Balances ($B unless otherwise noted) Q2/21 Q3/21 Canadian Retail Portfolio 466.8 479.2 Personal 378.9 387.4 Residential Mortgages 220.5 226.3 Home Equity Lines of Credit (HELOC) 97.7 99.9 Indirect Auto 27.4 27.6 Credit Cards 14.5 14.9 Other Personal 18.8 18.7 Unsecured Li
Slide 24: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 ▪ The PCL recovery this quarter reflects: $2,189 – A performing allowance release $123 – Partially offset by continued low $217 impaired provisions. $898 $921 $100 $316 Wholesale $20 $16 ($373) ($35) $951 $576 Cor
Slide 25: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL1: $B and Ratios2 124 126 122 108 103 bps 103 Highlights $9.2 $9.4 $8.9 74 $7.9 $8.0 $7.7 ▪ ACL decreased by $258MM quarter- over-quarter, reflecting: United States 59% 60% $5.3 59% – Continued improvement in credit Canada 62% 58% 58% conditions 61% 41% 40% 41% ▪
Slide 26: COVID-19 Industries of Focus
COVID-19 Industries of Focus Total Gross Loans & Acceptances: $747B Highlights (Q3 2021) ▪ Gross loans and acceptances to industries of heightened focus were $42 billion Residential Mortgages & – Representing ~5.7% of Total Bank HELOC, gross loans and acceptances 49.9% ▪ Lending portfolio remained w
Slide 27: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q3 2021 Financial Results 2 For the three months ended July 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Balan
Slide 28: Consistent Earnings Growth
Consistent Earnings Growth Reported Earnings (C$MM)1 5-year CAGR2 Reported Earnings: 8.2% (2.6% adjusted3) Reported EPS: 8.8% (3.1% adjusted3) $11,334 $11,686 $11,895 $10,517 $8,936 $8,024 Corporate Wholesale Banking U.S. Retail Canadian Retail 4 2015 2016 2017 2018 2019 2020 1. For the purpose of c
Slide 29: Strong, Consistent Dividend History
Strong, Consistent Dividend History Dividends Per Share (C$) $3.16 164-year continuous dividend history Dividend yield: 3.7%1 Target payout $0.22 range: 40%-50% Annual Dividend 1. As of Q3/21. Dividend yield is calculated as the dividend per common share divided by the average daily closing stock pr
Slide 30: Solid Total Shareholder Returns
Solid Total Shareholder Returns Canadian North American TD Bank Group Ranking1 Ranking2 One-Year 44.4% 4th 10th Three-Year 7.0% 4th 8th Five-Year 12.2% 4th 8th Ten-Year 12.2% 3rd 7th 1. Canadian Peer Ranking based on other 4 big banks (RY, BMO, BNS and CM). 2. North American Peer Ranking based on Ca
Slide 31: Canadian Retail
Canadian Retail Consistent Strategy Reported Net Income (C$MM) How we compete: $7,183 $6,863 ▪ Legendary personal connected $6,525 $5,988 $6,026 customer service ▪ Focus on underrepresented products and markets ▪ The power of One TD ▪ Winning culture and team $5,938 $6,525 $7,183 $7,421 $6,124 Highe
Slide 32: Canadian Retail
Canadian Retail Personal Banking Credit Cards ▪ #1 or #2 market share in most retail products1 ▪ Dual card issuer of high value brands, including TD First Class Visa ▪ TD's branch network in Canada continues to lead the market in total and TD Aeroplan Visa, and MBNA World Elite Mastercard hours open
Slide 33: U.S. Retail
U.S. Retail Consistent Strategy Reported Net Income (US$MM) How we compete: $3,750 ▪ Legendary service and convenience $3,253 ▪ Grow and deepen customer relationships $2,536 ▪ Differentiated brand as the “human” bank $2,234 $2,278 ▪ Productivity initiatives that enhance both the customer and colleag
Slide 34: U.S. Retail
U.S. Retail Personal & Commercial Banking Credit Cards ▪ Top 10 bank1 with over 9MM customers, operating retail stores in 15 ▪ Private label and co-brand credit card offering for U.S. customers states and the District of Columbia of regional and nationwide retail partners, including Target and ▪ Off
Slide 35: Wholesale Banking
Wholesale Banking Consistent Strategy Net Income (C$MM) How we compete: $1,418 ▪ Continue to build an integrated North American dealer franchise with global reach $1,054 $1,039 – In Canada, we will be the top-ranked investment dealer. $920 – In the U.S., we will deliver value and trusted advice in s
Slide 36: Wholesale Banking: Positioned for Growth
Wholesale Banking Positioned for Growth ▪ Lead mandates highlighting TD Securities' objective to build an integrated North American dealer franchise with global reach include: – Selected as one of two Structuring Advisors to the Government of Canada on its inaugural issuance of green bonds. TDS was
Slide 37: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q3 2021 Financial Results 2 For the three months ended July 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Balan
Slide 38: TD TLAC Requirements
TD TLAC Requirements ▪ Canadian D-SIBs will be required to meet their regulatory TLAC requirements by November 1, 2021. ▪ OSFI has stipulated that D-SIBs will be subject to 2 supervisory ratios: 1. Minimum risk-based TLAC ratio: 24.00% (21.50% + 2.50% Domestic Stability Buffer ("DSB")1) 2. TLAC leve
Slide 39: Industry-Leading Credit Ratings
Industry-Leading Credit Ratings Issuer Ratings1 Rating Agencies Senior Debt Ratings2 Outlook Moody's A1 Stable S&P A Stable DBRS AA Stable Ratings vs. Peer Group1 Moody’s Senior Debt2 / HoldCo5 Rating S&P Senior Debt2 / HoldCo5 Rating Aa1 AA- Aa2 A+ Aa3 A A1 A- A2 A3 BBB+ Baa1 BBB TD Canadian Peers
Slide 40: Leading Non-Common Equity Capital Ratings
Leading Non-Common Equity Capital Ratings NVCC Tier 2 Subordinated Debt Ratings Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2 BBB Baa3 BBB- Ba1 BB+ TD Peers 2 Canadian Peers TD Canadian Peers TD Canadian TD Canadian Peers2 Additional Tier 1 NVCC Preferred Share Ratings Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2
Slide 41: Robust Liquidity Management
Robust Liquidity Management Liquidity Risk Management Framework Liquidity Risk Management Framework ▪ Target a 90-day survival horizon under a combined ▪ TD holds a variety of liquid assets commensurate with Bank-specific and market-wide stress scenario, and a liquidity needs in the organization. mi
Slide 42: Deposit Overview
Deposit Overview Leader in Deposits Large base of personal and business deposits1 that make up 75% of the Bank's total funding ▪ TD Canada Trust ("TDCT") ranked #1 in Total Personal Deposits2 – legendary customer service and the power of One TD ▪ U.S. Retail is a top 103 bank in the U.S. with over 9
Slide 43: Low Risk, Deposit Rich Balance Sheet
Low Risk, Deposit Rich Balance Sheet1 Large base of stable retail and commercial Maturity Profile6,7 (C$B) (To first par redemption date) 50 deposits Issuance Maturity 40 ▪ Personal and business deposits are TD's primary sources of funds 30 – Customer service business model delivers stable base of “
Slide 44: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 Funding Strategy ▪ Wholesale term funding through diversified sources across domestic and international markets ▪ Well-established C$80 billion Legislative Covered Bond Program is an important pillar in global funding strategy ▪ Programmatic issuance for the establis
Slide 45: Canadian Registered Covered Bond Program
Canadian Registered Covered Bond Program Key Highlights Covered Bond Collateral ▪ Canadian residential real estate property with no more than 4 residential units ▪ Uninsured conventional first lien assets with original loan to value ratio that is 80% or less Housing Market Risks ▪ Latest property va
Slide 46: TD Global Legislative Covered Bond Program
TD Global Legislative Covered Bond Program Highlights Cover Pool as at July 31, 2021 ▪ TD has a C$80B legislative covered bond program ▪ High quality, conventional first lien Canadian ▪ Covered bonds issuance for Canadian issuers governed by CMHC-administered guidelines. Residential mortgages origin
Slide 47: Bail-in Implementation
Bail-in Implementation Regulation Overview ▪ On April 18, 2018, the Government of Canada published final regulations under the CDIC Act and the Bank Act providing details of the bank recapitalization "bail-in" regime and final Total Loss Absorbing Capacity (TLAC) guideline. ▪ The issuance regulation
Slide 48: Bail-in Overview
Bail-in Overview Scope of Bail-in ▪ In Scope Liabilities. Senior unsecured long-term debt (original term to maturity of 400 or more days) that is tradable and transferable (has a CUSIP, ISIN or other similar identification) and issued on or after September 23, 2018 1. Unlike other jurisdictions, Can
Slide 49: Appendix: Economic Outlook
Appendix Economic Outlook
Slide 50: TD Economics Update
TD Economics Update Global Outlook: COVID-19 Charts the Course for the Recovery ▪ The outlook for 2021 continues to be heavily virus dependent. Abundant vaccine supplies and fiscal stimulus have insulated most advanced economies (AEs) from the worst impacts of the pandemic this year – allowing them
Slide 51: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S. (%) ▪ The federal funds rate still rests on the 0% to 7 0.25% range. The Federal Reserve has Forecast recognized the economy has been making U.S. Federal progress with vaccinations, strong policy support 6 Funds Rate and employment gain. An adjus
Slide 52: Appendix: Credit Quality
Appendix Credit Quality
Slide 53: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment Highlights GIL Formations1: $MM and Ratios2 ▪ Gross impaired loan formations 23 decreased across all segments, remaining at cyclically low levels. $1,708 15 16 14 $40 / 5 bps 11 bps $1,203 $1,125 $13 / 2 bps $904 / 38 bps $36 / 6 bps $1,010 $47 / 8
Slide 54: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL1: $MM and Ratios2 Highlights ▪ Gross impaired loans continued to decline, reflecting the ongoing 51 impact of: – Support programs 42 42 $3,821 – Customer resilience 38 $343 / 52 bps 35 bps – The economic recovery $3,157 $3,057 $97 / 17 bps $2,803 $1
Slide 55: Credit Quality
Credit Quality Net impaired loans and PCL ratios (bps) 100 Q1 2021 56 52 50 45 31 46 48 46 38 39 Q3 2021 32 26 43 41 39 38 37 34 34 37 33 Q2 2021 Q1 2021 28 17 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 IFRS IFRS 9 1 Q2 2021 Q3 2021 -21 -0.02 Net impaired loans as a % of net loans and ac
Slide 56: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) 1,2 Impaired and Performing Highlights PCL ($MM) Q3/20 Q2/21 Q3/21 ▪ Impaired PCL remained at cyclically low levels, decreasing across all segments Total Bank 2,189 (373) (35) quarter-over-quarter Impaired 832 385 244 Performing 1,357 (758) (279) ▪ The smaller perfo
Slide 57: Canadian Personal Banking
Canadian Personal Banking Canadian Personal Banking (Q3/21) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%) ▪ Gross impaired loans Residential Mortgages 226.3 260 0.11 continued to decline across all Home Equity Lines of Credit (HELOC) 99.9 139 0.14 key asset classes Indirect Auto 27.6 45 0.16 C
Slide 58: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Highlights (Q3 2021) Quarterly Portfolio Volumes ($B) $300 $308 $312 $319 $328 Canadian RESL credit quality remained strong Uninsured Insured 72% 73% 74% 75% 76% ▪ Uninsured and insured portfolio loan-to- value rates decreased reflecting higher 28% 27%
Slide 59: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q3/21) Gross Loans/ GIL GIL/Loans ▪ Quarter-over-quarter gross BAs ($B) ($MM) (%) impaired loan decrease Commercial Banking1 91.8 478 0.52 largely reflected in: Wholesale 60.0 68 0.11 – Commercial Banking
Slide 60: U.S. Personal Banking (USD)
U.S. Personal Banking (USD) Highlights U.S. Personal Banking1 (Q3/21) ▪ Gross impaired loans further Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter Residential Mortgages 28.6 325 1.13 Home Equity Lines of Credit (HELOC)2 7.3 286 3.94 Indirect Auto 25.0 165 0.66 Credit Cards
Slide 61: U.S. Commercial Banking (USD)
U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking1 (Q3/21) Gross Loans/ GIL GIL/Loans ▪ Gross impaired loans BAs ($B) ($MM) (%) decrease quarter-over-quarter Commercial Real Estate (CRE) 24.9 146 0.59 reflected in the Commercial & Non-residential Real Estate 17.3 108 0.62 Industrial p
Slide 62: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 62